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ADGM QFZP Status and Corporate Tax Compliance: Why Audited Financial Statements Are Essential?

ADGM QFZP Status and Corporate Tax Compliance

The Essentials

Maintaining ADGM QFZP status is key to enjoying a 0% corporate tax rate, but it comes with strict compliance requirements. Audited financial statements play a central role in this process, providing proof of qualifying activities, and adherence to both ADGM and UAE tax regulations. Timely preparation, independent auditing, and accurate filing are essential to avoid losing the tax benefit and incurring penalties.


In ADGM, 0% corporate tax is earned, documented, and verified. For companies holding QFZP status, the key to keeping that advantage lies in audited financial statements.

These are evidence that your business is real, your activities qualify, and your company meets both ADGM and UAE tax standards. Miss the audit, and the benefits vanish, leaving your company exposed to standard corporate tax and penalties.

Let’s break down why audited financial statements are the backbone of ADGM QFZP status and how they safeguard your tax position while reinforcing corporate credibility.

Regulatory Framework for QFZP Audits

Under the UAE Corporate Tax regime and ADGM requirements, all entities electing ADGM QFZP status must produce audited financial statements in compliance with International Financial Reporting Standards (IFRS), regardless of their size or revenue levels.

Key regulations include:

  • Ministerial Decision No. 84 of 2025
  • ADGM guidance issued in August 2025

These mandates require all taxable persons, including QFZPs, to prepare audited financial statements for each tax period starting 1 January 2025. Audits must be conducted by ADGM-registered auditors, ensuring alignment between ADGM filings and Federal Tax Authority (FTA) corporate tax obligations.

Link Between Audited Financial Statements and ADGM QFZP Status

Audited financial statements are not merely a procedural formality – they are central to maintaining QFZP eligibility. To retain the 0% corporate tax rate, an ADGM entity must:

  • Conduct qualifying activities under Cabinet Decision No. 139 of 2023, avoiding excluded or non-qualifying activities.
  • Stay below the de minimis threshold for non-qualifying income.
  • Prepare and maintain IFRS-compliant audited financial statements annually.

Failure to comply with any of these conditions, particularly the audit requirement, results in automatic loss of QFZP status, exposing the entity to the standard 9% corporate tax rate and potentially backdated tax liabilities.

ADGM QFZP Status: Filing and Compliance Deadlines

ADGM has specified clear deadlines for filing audited financial statements. Filings must satisfy both:

  • ADGM Registration Authority requirements (Companies Regulations 2020, Part 9)
  • UAE Corporate Tax Law obligations (Federal Decree-Law No. 47 of 2022 and related decisions)

A limited “no-action” relief is available only for the first fiscal period where an audit is required solely for corporate tax purposes. Beyond this, audits are strictly mandatory and non-compliance is not tolerated.

Practical Importance of Audited Financial Statements

Audited financial statements serve multiple tax-related purposes, reinforcing both compliance and transparency:

  • Substantiating QFZP eligibility: Confirms that income qualifies for the 0% tax rate.
  • Supporting transfer pricing and related-party disclosures: Offers reliable data for regulatory filings and tax reporting.
  • Protecting directors and management: Reduces the risk of penalties, fines, and reputational damage.

In short, these audits are critical tool for tax planning, risk management, and regulatory compliance.

Consequences of Non-Compliance

Neglecting the audit requirement can have serious consequences:

  • Automatic loss of ADGM QFZP status, removing access to the 0% corporate tax rate.
  • Exposure to 9% corporate tax on all income for the current and prior periods.
  • Potential penalties under ADGM and Federal Tax Authority regulations.
  • Reputational damage that may affect licensing and investor confidence.

Maintaining QFZP status is therefore inseparable from maintaining robust, audited financial statements.

How MS Can Help Earn and Maintain ADGM QFZP Status?

Maintaining ADGM QFZP status requires precise compliance, accurate financial reporting, and timely filings. MS helps businesses go through this process by preparing IFRS-compliant audited financial statements, coordinating with ADGM-approved auditors, and ensuring all submissions meet both ADGM and the UAE corporate tax requirements. Beyond audits, we provide expert guidance on qualifying activities, and related-party transactions, helping your company retain the 0% corporate tax advantage while minimizing regulatory risk. With MS’s support, ADGM entities can achieve compliance efficiently and focus on strategic growth and operational excellence.

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ADGM AML Compliance in 2025: How AI and SupTech Are Transforming Financial Oversight?

The Essentials

The Abu Dhabi Global Market (ADGM) is redefining AML supervision through AI, advanced analytics, and supervisory technology (SupTech), shifting from reactive compliance to a proactive, intelligence-driven model. This transformation extends to virtual assets, staking frameworks, and cybersecurity integration, ensuring innovation is paired with robust oversight. The FSRA’s functional and data-driven approach strengthens ADGM AML compliance, enabling early detection of illicit financial activity, enhancing reporting accuracy, and supporting regulated entities in navigating evolving risks. Firms can leverage expert guidance and MLRO services to maintain operational integrity and align with ADGM’s forward-looking regulatory standards.


As finance becomes increasingly digital and borderless, regulators face the challenge of keeping pace with innovation while safeguarding integrity. The Abu Dhabi Global Market (ADGM) has emerged as a pioneer in this space, transforming ADGM AML compliance through artificial intelligence, advanced analytics, and supervisory technology (SupTech).

By leveraging real-time transaction monitoring, predictive modeling, and machine-learning-based risk assessment, ADGM’s Financial Services Regulatory Authority (FSRA) has shifted from traditional, reactive compliance to a proactive and intelligence-driven regulatory model. This transformation extends beyond conventional finance, encompassing virtual assets, staking frameworks, and cybersecurity integration, ensuring that innovation is matched with robust oversight.

A Digital Transformation in ADGM AML Compliance

ADGM’s adoption of AI-enabled tools, analytics, and supervisory technology (SupTech) has redefined AML supervision. The FSRA employs real-time transaction monitoring, predictive modeling, and machine-learning-based risk scoring, enabling the early identification of illicit financial behavior. These systems reduce false positives, automate compliance reporting, and enhance operational efficiency for institutions operating in the jurisdiction.

By embedding data analytics across regulated entities, ADGM has created an interconnected monitoring network capable of identifying patterns across both traditional and digital financial channels. This approach signals a shift from reactive compliance to proactive detection, aligning with the UAE’s broader agenda of reinforcing its reputation as a clean, innovation-driven financial hub.

Virtual Asset Oversight: A Functional Approach

The FSRA’s Virtual Asset Regulations and accompanying “Guiding Principles” emphasize responsible digital asset innovation while maintaining stringent ADGM AML compliance. A key principle requires firms to avoid any virtual asset transaction where a counterparty’s identity cannot be fully verified, directly addressing anonymity risks inherent in blockchain-based operations.

ADGM’s functional regulatory approach focuses on the economic activity performed, rather than simply the technological form or token classification. This ensures that firms offering novel virtual asset services remain within the regulatory scope, providing visibility over emerging business models and associated AML risks.

The 2025 Virtual Asset Staking Framework

In Consultation Paper No. 10 of 2025, the FSRA introduced a tailored regulatory perimeter for virtual asset staking, clarifying ADGM AML compliance triggers:

  • Regulatory activation: Oversight applies when authorised persons hold or control assets for staking on behalf of clients.
  • Custodial obligations: Custodians must obtain client consent for staking, and discretionary staking requires a Financial Services Permission (FSP) to manage assets.
  • Exemptions: Solo staking, where individuals stake their own assets without intermediation, remains outside regulatory scope.
  • Focus: Activities like liquidity mining or yield farming remain unregulated, narrowing AML oversight to staking within proof-of-stake blockchains.

This functional delineation ensures that AML controls target risk-bearing intermediaries rather than individual users, making compliance proportional to exposure.

ADGM AML Compliance: Integration of SupTech and Cyber Oversight

ADGM’s 2025 Cyber Risk Management Framework integrates AML supervision with cybersecurity resilience, reinforcing ADGM AML compliance across regulated entities.. Regulated entities are required to implement real-time data integrity checks, encrypted KYC processes, and adaptive incident reporting. These measures help defend against crypto-related cyber crimes such as ransomware payments or blockchain bridge exploits that can facilitate money laundering.

SupTech platforms consolidate blockchain transaction data with cross-border intelligence, enabling pattern recognition and jurisdictional collaboration. This harmonized data ecosystem ensures traceability across fiat and virtual asset conduits, a critical capability for detecting layering and obfuscation tactics common in crypto laundering schemes.

Strategic Implications for Regulated Firms

The convergence of technology and virtual asset regulation in ADGM presents both opportunities and compliance responsibilities:

  • Enhanced reporting accuracy: AI-driven AML screening aligns internal risk models with FSRA analytics.
  • Cross-sector collaboration: Firms are encouraged to participate in ADGM’s Financial Crime Prevention program to ensure transparency and intelligence sharing.
  • Future-proofing business models: Early compliance with staking and virtual asset obligations positions firms for leadership in the rapidly evolving digital finance ecosystem.

How MS Can Help in ADGM AML Compliance?

At MS, we help ADGM-regulated entities strengthen their AML frameworks and provide outsourced MLRO solutions to meet evolving supervisory expectations with confidence.

Our team works closely with firms to design and implement robust AML policies, establish risk-based controls, and align compliance systems with ADGM’s AI-driven supervisory standards. Through our MLRO services, we ensure your organisation has experienced leadership in overseeing compliance, managing reporting obligations, and responding efficiently to FSRA assessments.

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ADGM Annual Accounts Filing: What Has Changed for ADGM QFZPs? 

understanding the new ADGM annual accounts filing requirements is critical to staying compliant and preserving tax benefits. 

The Essentials 

The ADGM Registration Authority has issued new guidance making audits mandatory for all companies electing Qualifying Free Zone Person (QFZP) status under the UAE Corporate Tax regime. This update impacts businesses of all sizes, removing previous audit exemptions and linking compliance directly to ADGM annual accounts filing. Companies must now use ADGM-registered auditors, file audited accounts with the Registrar, and meet strict filing deadlines. Transitional measures are in place, but timely compliance is critical to preserve tax benefits. 

The Abu Dhabi Global Market (ADGM) Registration Authority has issued new guidance for businesses electing Qualifying Free Zone Person (QFZP) status under the UAE Corporate Tax regime. This update introduces significant changes to audit and filing obligations, and for many companies, it may differ from previous expectations. 

If your business is considering or already holding QFZP status, understanding the new ADGM annual accounts filing requirements is critical to staying compliant and preserving tax benefits. 

ADGM Annual Accounts Filing: What Has Changed for ADGM QFZPs? 

The new guidance makes one point clear: audits are now mandatory for all companies opting for QFZP status. Whether your business is large or small, active or dormant, the exemption from audits no longer applies once you elect to be treated as a QFZP. 

Here are the key updates on ADGM Annual Accounts Filing ADGM company should note: 

1. Audit Now Mandatory for All QFZPs 

Companies that previously enjoyed audit exemptions including small businesses, certain subsidiaries, or even dormant entities must now arrange for audited accounts if they seek QFZP status. 

2. Use ADGM-Registered Auditors 

Only auditors registered with ADGM are permitted to carry out these audits. This ensures consistency with local regulatory standards and enhances the credibility of financial reporting. 

3. All Audited Accounts Must Be Filed 

After completion, audited accounts must be filed with the ADGM Registrar. This filing requirement applies universally, regardless of why the company needed the audit. Simply put, no ADGM annual accounts filing will be accepted without an audit. 

4. Transitional Arrangements in Place 

The ADGM has introduced certain transitional measures to ease the shift. However, businesses remain ultimately responsible for compliance, and the deadlines are approaching quickly. 

Deadlines for ADGM Annual Accounts Filing 

While the audit requirement is new for QFZPs, the obligation to file annual accounts has long been part of ADGM’s compliance framework. Businesses must continue to meet these existing ADGM annual accounts filing deadlines:  

If the first financial year is 12 months or less, annual accounts must be filed within nine (9) months of the Accounting Reference Date (ARD). 

  • If the first financial year is more than 12 months, annual accounts must be filed within nine (9) months of the first anniversary of incorporation. 
  • Subsequent Annual Accounts (for existing private companies or LLPs): 
  • From the second year onwards, accounts must be filed within nine (9) months of the ARD. 

These timelines were already in place but take on greater importance now that all QFZPs must arrange audits before filing. 

How MS Can Help in ADGM Annual Accounts Filing 

At MS, we understand that compliance in ADGM is about ensuring your business continues to benefit from its chosen structure without unnecessary risk. With our strong presence in both ADGM and DIFC, we bring: 

  • Expert Guidance on QFZP Status – Helping you assess eligibility and maximize the available corporate tax advantages. 
  • Audit & Filing Support – Coordinating with ADGM-registered auditors and ensuring your audited accounts are prepared, reviewed, and filed on time. 
  • Compliance Calendar Management – Tracking key dates such as ARD, incorporation anniversaries, and filing deadlines so you never miss a requirement. 
  • End-to-End Corporate Services – From incorporation to ongoing governance, we provide a single-source solution tailored to your business needs. 

With filing ADGM annual accounts filing deadlines approaching and audit requirements now universal for QFZPs, MS can help you stay compliant and safeguard your tax position.  

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How to Spot and Fix Critical Flaws in Succession Planning for Global Families?  

For globally mobile families, preserving wealth is just the beginning. The greater challenge lies in sustaining unity, purpose, and legacy across generations and borders. As family structures grow more complex and assets span multiple jurisdictions, the risk of misalignment, internal disputes, and erosion of shared values increases.  

Let’s explore the common pitfalls that can undermine effective succession planning for global families and how proactive governance, clear communication, and the support of sophisticated family office structures  

The Hidden Fault Lines in Succession Planning for Global Families  

1. Succession Disputes Are Common, Even Among Ultra-Wealthy Families 

In globally mobile families, members are often dispersed across multiple countries, each with its own inheritance laws, tax regimes, and regulatory frameworks. Without a unified governance structure, these conflicting rules can create confusion over rights and responsibilities. The result? Disputes, delays, and costly legal battles that can erode not only the financial value of the estate but also the trust and cohesion within the family. For effective succession planning for global families, cross-border alignment is essential to avoid unintended consequences and preserve both wealth and harmony. 

2. Lack of Clear Governance Leads to Costly Legal Battles 

Global families often have members spread across multiple countries, each with different inheritance laws, tax systems, and regulations. Without a unified governance framework, conflicting rules can cause confusion and disputes over rights and responsibilities. This complexity often results in protracted legal battles, significant costs, and unintended tax consequences, undermining the value intended to be passed on. 

3. Legacy Is More Than Just Money 

Legacy encompasses more than financial assets. It includes a family’s identity, values, name, culture, and long-term vision. When succession planning focuses solely on the transfer of money, the family risks losing the core principles and story that give meaning to their wealth. Without this broader perspective, heirs may lack a sense of stewardship and responsibility, leading to disengagement or misuse of family resources. 

4. Succession Planning Is Treated as a One-Time Event 

Succession planning for global families is approached as a single, static event rather than an ongoing, dynamic process. Families grow, change, and experience life events, while laws and market conditions evolve. If succession plans are not regularly revisited and updated, they become outdated, misaligned with current family realities, and potentially legally ineffective. 

5. Communication Gaps Between Generations Create Misunderstandings 

One of the biggest challenges in succession planning for global families is the lack of open, honest communication between generations. Senior family members may withhold information to protect younger generations, while heirs may feel excluded and undervalued. This communication breakdown fosters assumptions, resentment, and surprises that can damage trust and relationships once wealth and leadership change hands. 

6. Lack of a Family Constitution or Charter Leaves Intentions Unclear 

Without a formal family constitution or charter to capture shared values, governance rules, and conflict resolution mechanisms, succession intentions can be ambiguous. Legal documents such as wills or trusts may dictate asset distribution but rarely reflect the family’s collective vision or provide clear guidance on behavior and decision-making, increasing the risk of disputes. 

7. Standard Structures Don’t Accommodate Cross-Border Heirs 

Global families face significant challenges when heirs reside in different jurisdictions with varied tax laws, inheritance rules, and compliance requirements. Relying on standard wills or generic trust arrangements can expose families to unintended tax liabilities or legal complications, reducing the effectiveness of wealth transfer and potentially triggering conflicts among heirs. 

8. Modern Family Dynamics Add Legal and Emotional Complexity 

Families today are diverse, with blended households, stepchildren, second marriages, and different cultural or religious backgrounds. These factors complicate legal entitlements and expectations. Ignoring such dynamics in succession planning risks exclusion, unfairness, or emotional friction that can disrupt the family’s unity. 

9. Lack of Education and Engagement Among Heirs Weakens Legacy 

Even the most carefully structured succession can falter if heirs lack the knowledge, skills, or engagement to manage their inheritance. Many heirs remain unaware of the family’s wealth structures or business interests, leading to mismanagement or disconnection. Without deliberate education and involvement, the family’s legacy may be lost within a generation. 

10. Equal Doesn’t Always Mean Fair in Inheritance 

While equality is often perceived as fairness, it may not reflect individual circumstances such as personal capabilities, contributions to the family enterprise, residency, or tax considerations. Applying an equal distribution without nuance can cause feelings of injustice and resentment, fracturing family harmony. 

How UAE Family Offices Strengthen Succession Planning for Global Families? 

UAE-based family offices, particularly within frameworks like DIFC and ADGM, offer a robust platform for succession planning for global families. Beyond wealth administration, they help families institutionalize values, identity, and long-term vision through governance tools such as family charters and constitutions. With access to multidisciplinary experts, these offices design bespoke structures like trusts and foundations that address cross-border legal, tax, and residency considerations. They also foster transparency, generational dialogue, and education, critical for reducing disputes and aligning expectations. In an increasingly complex global environment, UAE family offices provide the stability, confidentiality, and strategic foresight needed to ensure smooth transitions and sustained legacy. 

MS: Supporting Succession Planning for Global Families Through UAE Family Offices 

At MS, we specialize in establishing and managing sophisticated family office structures in leading jurisdictions like DIFC. Our team brings deep cross-border expertise to help families design governance frameworks that reflect their unique values, vision, and long-term goals. We assist in drafting family constitutions, implementing tailored trusts and foundations, and advising on residency, tax, and succession planning for globally dispersed heirs. 

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HoldCos within Family Foundations: How the MoF Update on Family Foundations Enhances Tax Relief and Simplified Compliance for HoldCos? 

In recent years, the UAE has continuously refined its corporate tax regime to enhance its appeal as a global business hub and a destination for wealth management. Among the latest developments is the introduction of a new tax framework under Ministerial Decision No. 261 of 2024, which takes effect retroactively from June 1, 2023, aimed at making holding companies within Family Foundations even more attractive for asset management and succession planning. 

This move significantly impacts how Holdcos within family foundations are taxed and managed, simplifying compliance while ensuring that UAE remains a leading jurisdiction for family wealth structures. 

The New Tax Transparency Framework for UAE HoldCos within Family Foundations 

Under the new regime, holding companies that are part of UAE Family Foundations can opt to be treated as an Unincorporated Partnership for the purposes of UAE corporate tax (CT). This is a significant shift, as it enables holding companies with assets such as bank accounts, real estate, and portfolios to avoid corporate tax, without having to meet the 12-month holding period requirement that traditionally applied for tax relief. 

Key Benefits:  

  • Exemption from Corporate Income Tax: Holding companies will not be subject to UAE CT, provided they are structured as part of the Family Foundation. This is a notable advantage compared to other types of corporate structures. 
  • Simplicity in Asset Management: This move simplifies the management of family wealth, particularly in private wealth structures that involve holding assets like real estate or financial portfolios. 
  • Flexibility: Families and individuals can better structure their assets, without the complexities of traditional tax relief requirements or corporate tax obligations. 

Simplified Accounting and Audit Compliance for HoldCos within Family Foundations 

The recent changes to UAE tax regulations bring significant ease to the accounting and audit requirements for holdcos within Family Foundations. Previously, businesses in the UAE were required to undergo an annual financial audit and comply with International Financial Reporting Standards (IFRS). However, under the new framework, holdcos within family foundations are no longer subject to these stringent audit requirements. This means that they are not required to conduct an annual audit, which saves valuable time and reduces operational costs. Additionally, holding companies can now adhere to basic accounting standards similar to those used by the family foundation itself, streamlining operations and further reducing the burden of compliance. The removal of the mandatory audit and simplified accounting standards translates into substantial cost savings, allowing families to manage their wealth structures more efficiently. 

DIFC: A Strategic Hub for Family Wealth Management

The Dubai International Financial Centre (DIFC) remains a top choice for families seeking efficient wealth management and succession planning. With its strong global reputation, DIFC provides a secure and compliant environment for structuring family wealth through holdcos within family foundations. The recent regulatory updates simplify succession planning, offering straightforward tools for wealth transfer, while streamlined governance and reduced compliance burdens enhance operational efficiency. These changes make DIFC an even more attractive and flexible solution for families aiming to protect and grow their wealth across generations. 

Building a Lasting Legacy: Tailored Support for Family Foundations by MS 

At MS, we are dedicated to supporting family offices and foundations through this pivotal transition, providing customized strategies that align with your vision for the future. With our expertise, you can confidently take full advantage of the new Ministry of Finance update on Family Foundations, unlocking valuable opportunities even by setting up holdcos within family foundations while protecting your family’s legacy. Let us work with you to establish a resilient and efficient foundation structure that ensures your wealth and values are preserved for generations ahead. 

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Updated ADGM Employment Regulations! Remote work, part-time definitions and visa guidelines to be effective from April 1, 2025 

The Abu Dhabi Global Market (ADGM) has updated ADGM Employment Regulations 2024 (the “New Employment Regulations”), which bring forward significant improvements that align with global best practices, offering benefits to both employers and employees. With a focus on clarity, flexibility, and fairness, these regulations create a more balanced and progressive work environment. For businesses, the changes offer the opportunity to refine employment policies, enhance employee relations, and ensure compliance with modern workplace standards. As the regulations come into effect on 1st April 2025, employers have a valuable window of time to implement the necessary adjustments, positioning themselves for a smoother, more compliant future while fostering a supportive workplace culture. 

Let’s dive into the key insights of updated ADGM Employment Regulations that will shape the future of employment in ADGM. 

1. Introduction of Flexible Employment Models 

One of the significant updates in the ADGM employment regulations is the introduction of more flexible working arrangements. Employers will now be able to hire remote employees, and the definition of an “employee” has been expanded to accommodate this shift. This change provides more room for businesses to operate in a global landscape, allowing them to hire talent from outside the UAE without needing a local residence visa or work permit, as long as the employee doesn’t reside in the UAE. 

2. Enhanced Employee Rights and Clarifications 

The updated ADGM employment regulations provide greater clarity on employee entitlements, particularly for part-time employees. These changes aim to ensure that part-time workers are given their fair share of benefits, including leave entitlements. Employers will need to adjust their records and contracts to account for these nuances, ensuring that all employees, regardless of hours worked, are treated fairly and consistently. 

3. Probationary Period Updates 

The probationary period remains capped at six months, but the regulations now specify that employees during this period are entitled to sick leave, though not sick pay. During probation, certain provisions of the regulations do not apply, and the employee must have written approval from the employer to take annual leave. These updates provide greater transparency for both employers and employees regarding their rights during this trial period. 

4. Parental Leave and Family Rights 

The regulations extend important parental rights, including maternity leave of 65 working days, and now include provisions for employees who adopt children under the age of five. Maternity leave also extends to cases where a stillbirth or miscarriage occurs after the 24th week of pregnancy. Paternity leave remains at five working days. These updates ensure that employees receive the necessary support during significant life events. 

5. Anti-Discrimination and Anti-Victimisation Provisions 

The updated ADGM employment regulations place a greater emphasis on protecting employees from discrimination and victimisation in the workplace. Victimisation, as defined in the regulations, includes actions like dismissal or other detrimental treatment following an employee’s participation in protected acts, such as whistleblowing or filing a complaint regarding discrimination or harassment. Employers must take proactive steps to prevent such behaviour and must provide employees with a safe space to report wrongdoing. 

6. Whistleblower Protection 

The new regulations strengthen whistleblower protections by ensuring that employees who make protected disclosures are not subject to retaliation. Employers are prohibited from retaliating against employees who report violations of law, including harassment, discrimination, or health and safety concerns. If retaliation occurs, the employee can seek compensation and a court remedy. 

7. Working Hours and Overtime 

The maximum weekly working hours remain set at 48, but employees must provide written consent to work overtime. The law also stipulates a 25% reduction in working hours during Ramadan for Muslim employees, with no reduction in pay. While there are currently no specific provisions for overtime pay, the ADGM may issue further guidelines in the future. 

8. Termination and End of Service Gratuity 

The updated ADGM Employment Regulations introduce detailed provisions around the termination of employment. Employers will need to provide employees with written reasons for termination, and the notice period remains the same as under the old law. Notably, end-of-service gratuity is now payable in all cases where the employee has more than one year of service, even if the termination is for cause. Employers will also need to offer repatriation flights to eligible employees who are terminated, unless the employee is dismissed for cause. 

9. Settlement Agreements 

Settlement agreements, which are used when terminating an employment relationship, continue to be recognized under the new regulations. However, for a settlement agreement to be valid, it must include a clause that the employee has had the opportunity to receive independent legal advice. Additionally, the employer cannot make the cancellation of the employee’s visa conditional on waiving any rights according to the updated ADGM Employment Regulations. 

10. Vicarious Liability for Employers 

Employers will be held vicariously liable for the actions of their employees if these actions breach the new employment regulations, provided the act occurred during the course of employment. This means employers must be diligent in creating clear policies and training programs that prevent misconduct, including discrimination, harassment, and victimisation, to mitigate the risk of legal liabilities. 

11. Remote and Part-Time Employees 

The concept of “remote employees” and “part-time employees” is now formalized in the updated ADGM Employment Regulations. Remote employees, who work outside the UAE, will be subject to different rights and obligations, and their work arrangements will not require a UAE residence visa or ADGM work permit. Meanwhile, part-time employees will benefit from clearer guidelines around leave entitlements and other employment benefits, making it easier for employers to manage such employees. 

Updated ADGM Employment Regulations 2024: A New Era of Workplace Flexibility and Fairness 

The updated ADGM Employment Regulations 2024 usher in a new era of workplace fairness, flexibility, and compliance that benefit both employers and employees. Employers have the opportunity to refine their policies, adapt to modern workplace trends, and ensure they meet legal requirements before the regulations take effect in April 2025. These changes not only enhance employee satisfaction and support but also offer businesses a chance to stay ahead of the curve in a competitive and evolving market. It’s an exciting time for companies in ADGM to prepare for a future where fairness and flexibility are at the forefront of work experience. 

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ADGM Annual Accounts Compliance Requirements You Should Know

As a world-class international financial centre, Abu Dhabi Global Market (ADGM) has set a high bar for corporate governance, transparency, and financial reporting. Companies operating within ADGM are required to meet stringent standards to maintain their good standing and ensure that their financial statements reflect accuracy, accountability, and integrity.

When it comes to preparing your company’s annual accounts, getting the numbers right is just the beginning. From currency denomination standards to ensuring the right signatures are in place, each compliance detail plays a crucial role in shaping the accuracy, credibility, and reliability of your financial reporting. Whether you’re a startup or an established enterprise, meeting these key requirements isn’t just compliance —it’s about building trust with investors, aligning with international standards, and setting the stage for future growth.

Explore the key aspects of ADGM annual account compliance requirements.

1. Currency Denomination: Accounts Must Be in USD

One of the fundamental requirements for preparing annual accounts is that all financial statements must be denominated in U.S. Dollars (USD). This standardization ensures consistency and comparability, particularly for companies that operate across borders or engage with international stakeholders. Presenting accounts in USD helps to avoid currency translation issues and provides a clearer picture of financial performance on a globally recognized scale.

Key Points to Consider:

  • Consistency: All transactions, assets, liabilities, income, and expenses should be recorded in USD.
  • Conversion Rates: For companies dealing in multiple currencies, it’s essential to use consistent exchange rates and disclose the rates used in the notes to the accounts.
  • Regulatory Compliance: Adhering to USD denomination aligns with international accounting standards, particularly for companies registered in jurisdictions that mandate USD for financial reporting.

2. Balance Sheet Signatures: Director’s Responsibility

The balance sheet is one of the most critical components of the annual accounts, providing a snapshot of the company’s financial position at a specific point in time. To ensure accountability and authenticity, the balance sheet must be signed by a director of the company, with the director’s name clearly stated. This requirement highlights the director’s role in overseeing financial accuracy and attests to the reliability of the information presented.

Key Points to Consider:

  • Legal Accountability: The director’s signature on the balance sheet signifies that the accounts have been reviewed and approved by the company’s management.
  • Transparency: Including the name of the signing director fosters transparency and reinforces stakeholder confidence in the company’s financial disclosures.
  • Documentation: The signed balance sheet should be properly archived as part of the company’s official records.

3. Audited Accounts: Director’s Report Signature

For audited accounts, the Director’s Report is a critical narrative that accompanies the financial statements, providing insights into the company’s performance, strategy, and outlook. This report must be signed by a director or the company secretary, with the name of the individual clearly stated. This requirement ensures that senior management takes ownership of the content, emphasizing the importance of the report in providing context to the figures presented.

Key Points to Consider:

  • Clarity and Accountability: The Director’s Report outlines the key activities, risks, and governance matters of the company, and its authenticity is validated through the signature.
  • Insightful Information: It provides shareholders and other stakeholders with a comprehensive view of the company’s operations beyond the numbers.
  • Compliance: The signature requirement ensures that the report complies with relevant corporate governance standards.

4. Auditor’s Report: Naming the Audit Firm and Senior Auditor

The Auditor’s Report is a crucial element of the annual accounts, offering an independent evaluation of the company’s financial statements. This report must include the name of the audit firm and the senior auditor responsible for the audit. Naming the audit firm and the senior auditor adds credibility to the financial statements and assures stakeholders of the rigor of the audit process.

Key Points to Consider:

  • Independence and Assurance: An external audit provides independent verification of the company’s financial statements, enhancing their credibility.
  • Transparency: Naming the audit firm and the senior auditor offers transparency and accountability, especially in case of any discrepancies or audit qualifications.
  • Professional Standards: The inclusion of the audit firm and auditor’s names aligns with international auditing standards and fosters trust among investors and regulators.

Ensuring ADGM Annual Accounts Compliance with Expert Guidance from MS

Understanding the complexities of ADGM annual accounts compliance requirements can be daunting, but MS is equipped to make the process seamless and stress-free. At MS, we offer specialized support to help your company meet all ADGM compliance standards for annual accounts preparation. With our comprehensive approach, you can avoid compliance pitfalls, streamline your annual reporting, and strengthen the credibility of your financial statements. Trust us to be your partner in compliance, ensuring that your ADGM annual accounts are prepared with precision and in full alignment with regulatory expectations.

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What Should Companies Focus on for a Successful ADGM Annual Audit?

ADGM Annual accounts

Today, compliance is far more than a box to tick. Companies that master the art of regulatory adherence don’t just avoid penalties; they thrive, gaining the trust of stakeholders and reinforcing their reputation in a competitive landscape. Compliance, especially in financial reporting, demands a sharp eye for detail and a forward-thinking strategy, turning what may seem like an obligation into a powerful tool for growth.

At the forefront of regulatory adherence is the Abu Dhabi Global Market (ADGM), a visionary force in the UAE known for its rigorous standards and commitment to transparency. For companies and LLPs registered under ADGM, the preparation of annual accounts is not just a routine task. These financial statements, thoroughly prepared in line with International Accounting Standards (IAS), provide a clear lens into a company’s fiscal health, offering critical insights for both internal decision-makers and external stakeholders.

With the September 30th deadline for submitting these accounts fast approaching, businesses must understand the audit process with care and precision, ensuring that their financial records not only meet ADGM’s regulatory requirements but also stand as a testament to their financial integrity.

In light of the RA’s 2023 assessments, it is crucial for company directors, especially those serving on audit and risk committees, along with audit partners, to carefully scrutinize and approve the ongoing audit work on company accounts.

Accurate, timely, and insightful corporate reporting is fundamental to the proper functioning of capital markets, investor confidence, and the protection of public interests. The RA places a strong emphasis on high audit quality as a regulatory priority and may hold audit firms, audit principals, and company directors responsible for any deficiencies in the preparation or auditing of financial statements.

Key Findings by ADGM Annual Audit 2023 on How Audits Can Go Wrong

ADGM’s commitment to maintaining a strong regulatory environment extends to its audit requirements. Companies must align their audit practices with ADGM’s stringent standards, which prioritize several key areas:

  1. Tailored Audit Approaches: One of the most critical aspects of an ADGM audit is the use of methodologies tailored to incorporate ADGM’s specific requirements. Limited or improper application of these methodologies can lead to significant gaps in the audit process, particularly concerning financial statement disclosures. Utilizing a financial statement disclosure checklist that factors in ADGM requirements is essential for ensuring accuracy and completeness.
  2. Strategic Audit Planning: A well-structured audit begins with strategic planning. However, common issues such as inadequate understanding of the entity, its environment, and risk factors can hinder the audit process. Effective planning procedures, including a comprehensive risk assessment, are crucial for identifying potential challenges early in the audit process and ensuring all relevant areas are covered.
  3. Revenue Verification: Revenue is often a focal point in financial audits, and ADGM audits are no exception. Insufficient audit evidence on key audit assertions can arise from weak audit tests and inadequate planning. Ensuring robust audit tests and well-documented procedures can mitigate these risks, providing a clearer and more accurate representation of the company’s financial performance.
  4. Comprehensive Group Audits: For companies operating as part of a group, group audits present additional complexities. Common challenges include inadequate work by the group auditor, especially in areas such as scoping, materiality, and communication with component auditors. To address these issues, group auditors must establish clear communication channels and ensure a thorough understanding of the component auditors’ work.
  5. Thorough Journals Testing: Journals testing is a critical component of any audit, particularly when there is a significant risk of management override of controls. However, some audit teams fail to conduct adequate work in this area, leading to potential oversight of key risks. Implementing rigorous journals testing procedures can help auditors detect and address these risks effectively.
  6. Assessing Going Concern and Subsequent Events: Auditors must also evaluate the entity’s ability to continue as a going concern and identify any post-period events that require disclosure or adjustment in the financial statements. Inadequate work in this area can lead to significant misstatements. Auditors should conduct thorough reviews and analyses to support the going concern assumption and ensure all relevant events are accounted for.
  7. Ensuring Quality Control: Lastly, maintaining high standards of quality control throughout the audit process is paramount. This includes the active involvement of the ADGM Registered Audit Principal from the planning stage through to completion. Additionally, the engagement partner responsible for issuing and signing the audit report should be consistently involved to ensure continuity and oversight.

Preparing for Your 2024 ADGM Annual Accounts

As the September 30th deadline approaches, it’s vital for companies in ADGM to review their accounting and audit processes and ensure they meet all regulatory requirements. By focusing on the key areas highlighted above, companies can not only comply with ADGM standards but also enhance the accuracy and reliability of their financial statements.

Streamline Your ADGM Annual Accounts Filing with Expert Support from MS

At MS, we specialize in ensuring seamless compliance with the annual filing requirements of the ADGM. Our team of experts guides you through every step of preparing and submitting your annual accounts, aligning with ADGM’s stringent regulatory standards. From accurate financial reporting to timely submissions, we handle the entire process, reducing your administrative burden and ensuring that your business remains in good standing with the regulatory authorities. With our tailored approach, we make sure your financial statements are precise, compliant, and reflective of your company’s financial health.

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News & Press Releases

What’s New: Proposed Amendments to ADGM Employment Regulations Explained

The Abu Dhabi Global Market (ADGM) is poised to update its Employment Regulations, initially enacted in 2019. These regulations were designed to set minimum employment standards, ensure a fair balance between employee and employer rights, and foster effective employment practices within ADGM. Since their inception, the Regulatory Authority (RA) has recognized the need for adjustments to better reflect evolving global work practices and to provide clearer guidance on rights and obligations for both employees and employers.

The RA has recently issued a Consultation Paper inviting public feedback on these amendments to ADGM Employment Regulations. This consultation is crucial for all ADGM-licensed employers, their employees, and prospective employees, as well as their legal advisors.

Here’s a breakdown of the key changes being proposed:

Proposed Amendments to ADGM Employment Regulations

1. Employee Entitlements and Definitions

  • Probationary Period Entitlements: Clarification on employee entitlements during probation.
  • Broadening the Definition of ‘Employee’: Updated to include full-time remote workers and flexible arrangements.
  • Part-Time Employee Definition: Introduction of a new definition and method for calculating entitlements.

2. Working Arrangements

  • Remote and Hybrid Working: Explicit permission for remote and hybrid working arrangements.
  • Simplified Overtime Calculation: Removal of complex overtime calculation methods.

3. Leave Entitlements

  • Enhanced Parental Leave: Additional entitlements for adopting parents and paid paternity leave for adopting fathers.
  • Nursing Breaks for Female Employees: Entitlement to nursing breaks.
  • Bereavement Leave: Leave entitlement for the death of close family members.

4. Employment Duties and Termination

  • Expanded Employee Duties: Broadening the list of employee duties.
  • Termination Due to Unauthorized Absence: Employers’ right to terminate employment for unauthorized absences.
  • Certificate of Experience: Eligibility for a certificate of experience upon employment termination.
  • End of Service Gratuity: Clarity on gratuity payments regardless of the reason for termination.

5. Discrimination and Compensation

  • Discrimination and Victimization: New provisions addressing these issues and vicarious liability.
  • Integration of Compensation Awards Rules: Integration of compensation awards rules into the main regulations.

6. Work Permit and Identity Card Requirements

  • Work Permit and Identity Card: Requirements for obtaining and canceling work permits and identity cards in ADGM.

Next Moves for Proposed Changes to ADGM Employment Regulations

The RA is seeking comments on these proposals by 26 August 2024. Following this, the RA and the ADGM Board of Directors will review the feedback and make any necessary adjustments before finalizing and enacting the updated regulations. These changes are set to enhance employment practices within ADGM, providing clearer guidelines and more equitable entitlements.

Stay tuned for further updates on the proposed changes to ADGM Employment Regulations and if you want to know more about the existing key requirements and best practices ADGM Employment Regulations, dive into our article.

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News & Press Releases

ADGM announces fee revision for non-financial and retail licenses effective from 2025

non-financial and retail license fees

The Abu Dhabi Global Market (ADGM) has announced a significant reduction in its existing commercial license fees as part of its ongoing support for businesses transitioning to Al Reem Island. The new fee structure will take effect from 1st January 2025, featuring substantial reductions of 50% or more for obtaining non-financial and retail licenses within its jurisdiction.

Revised non-financial and retail license fees – key updates

The initiative’s intention is to enhance ADGM’s business ecosystem making it accessible and attractive for various businesses. Under the revised schedule:

  1. Registration fees for new businesses in the non-financial category will be reduced from $10,000 to $5,000.
  2. The annual license renewal fees for the same category will be lowered from USD 8,000 to USD 5,000.
  3. Registration fees for the retail category have been slashed from USD 6,000 to USD 2,000.
  4. License renewals for the retail category will also see a 50% reduction, lowering annual fees to USD 2,000.

The revised licensing fees will take effect on 1st January 2025, aligning with the conclusion of the current transition period on 31st December 2024. This new fee structure will apply throughout ADGM’s jurisdiction, covering both Al Maryah and Al Reem Island.

Hamad Sayah Al Mazrouei, the CEO of ADGM RA said “To facilitate a seamless transition, ADGM and its Registration Authority have proactively introduced various initiatives, prioritising our business community at the core of every decision. We assessed the financial impact on different business categories and previously implemented a fee waiver for qualifying non-financial and retail businesses on Al Reem Island. Building on these efforts, we have now revised our fee structure to include significant reductions for the same categories starting next year. Our aim is to minimise potential disruptions for businesses transitioning to an ADGM licence, enabling them to operate efficiently within our jurisdiction.”

Changes across categories

The fee exemption for qualifying non-financial and retail businesses on Al Reem Island ends on October 31, 2024. In other categories, ADGM’s financial registration fees will rise to USD 20,000 with renewals at USD 15,000 annually. Tech and fintech startups will experience minor adjustments in fees, with both new registrations and renewals set at USD 1,500. Fees for Special Purpose Vehicles (SPVs) remain steady at USD 1,900. A detailed fee schedule applicable from January 1, 2025, will be published in December.

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